The Brisbane CBD Office market’s confidence has been hit, the continued uncertainty regards to demand has achieved negative take up; all resulting in the total vacancy rate increasing to 16.2% (January 2018). These market conditions have translated into the fifth consecutive period of compression in capital values for the strata market, despite a turnaround in investment activity. While owner occupiers do feature in this market, private investors who are now more comfortable moving up the risk curve after this price correction have fuelled these elevated transaction levels.
Limited job growth prospects have resulting in growing vacancies across all qualities of office stock which also translated into a “no movement” face rental position during much of 2017. Continued high incentives remain
commonplace and are unlikely to leave the market until fundamentals return to more normalised levels.
Bucking the trend is the freehold investment market that has been active due to the strong weight of funds domestically looking to invest. Yield compression continues to occur with prime yields now average 6.25% while secondary has now hit 7.75%.